An effective business structure is crucial for a company's success and growth. An SAR structure, also known as Separation of Control and Economic Ownership, is a strategy increasingly used to balance stakeholders' interests and establish a solid foundation for sustainable growth. In this article, we delve into what an SAR structure entails and how it can contribute to a company's success.
An SAR structure involves separating a company's economic ownership from its control. In other words, those owning economic interests in the company do not automatically hold decision-making authority. This can be implemented in various ways, depending on the specific needs and objectives of the company.
One of the main advantages of an SAR structure is its ability to effectively manage risks. Those with control can make strategic decisions without personally bearing economic risk. This can be particularly valuable in situations involving complex financial transactions or investments.
An SAR structure can foster talent attraction and retention. Top managers and key employees can be rewarded with economic interests, providing them with a direct incentive to contribute to the company's growth and success. Simultaneously, those with control can ensure alignment with the company's vision and objectives.
For family businesses, an SAR structure can be an excellent solution to ensure business continuity when transitioning to the next generation. It allows for the distribution of economic interests among heirs while retaining decision-making authority in the hands of the most experienced and knowledgeable individuals.
Additionally, an SAR structure can enhance a company's appeal to investors. Investors may find reassurance in knowing that those with control have a clear path to steer the company's course, while they themselves can benefit from the economic advantages.
An SAR (Stock Appreciation Rights) structure offers a flexible and effective means to separate control and economic interests within a company. By incorporating a STAK (Stichting Administratiekantoor) into the company's structure, SARs can be managed more efficiently, ensuring alignment between shareholders' interests and management control. This approach helps in managing risks, attracting and retaining talent, facilitating succession planning, and appealing to investors, thereby contributing to a company's sustainable growth and success. Schedule a brief call with Share Council's CEO for personalized advice on implementing an SAR structure tailored to your company's specific needs.